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Vista Pharma closes energy trading business on losses in IMO futures

09 Jan 2019

Oslo-based metformin producer Vistin Pharma ASA on Tuesday (8 January) provided an update on its energy trading business which posted loss of NOK 101.3 million (US $11.8 million) on IMO 2020 financial derivative contracts.

It says it will continue to manage the outstanding financial derivative contracts, but will not enter into new energy trading investments and close the energy trading business.

“On 16 March 2018, Vistin Pharma announced the development of a new business area within energy trading. The ambition was to develop a trading business, which would profit from investment opportunities caused by fundamental changes in the oil and energy market,” it says.

“The company was planning to invest its own funds, as well as establish dedicated closed-end funds for specific investment opportunities.

“To establish a sustainable business unit based on energy trading has proved to be demanding. The international energy markets have been challenging and the trading positions taken by the company has so far not performed as planned.

“The current market conditions have also made it difficult to raise external capital for closed-end funds.”

Under the IMO 2020 financial derivative contracts, Vista Pharma is financially exposed to the difference in USD price (spread) per metric ton between ICE low sulphur Gasoil and Sing380.

The total contract volume is 150,000 metric tons, and the contracts expire on 31 December 2020. The market-to-market value of these contracts was negative USD 9.8 million (NOK 85.0 million) as of 31 December 2018.

Related: Vistin Pharma in US $11.8 million trading loss over IMO 2020 futures

Published: 9 January, 2019
 

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